Connect for Kids' advocacy director, Jan Richter

For low-wage families, the costs of medical care, food, housing and childcare require a juggling act to survive. Low-wage parents get by through hard work, determination and the help of public benefits they count on to stretch their earnings and take care of their families.

The Bush administration, however, is trying to reduce the federal obligation and oversight for many of these benefit programs, in what looks like a coordinated effort to shrink the federal government’s responsibility for public services. Across the board, this administration is proposing to “block grant” social programs, shifting authority to the states and establishing fixed yearly amounts of federal funding. This represents a radical change in the federal approach to supports for struggling families such as Medicaid health insurance, food stamps, housing assistance, Head Start, workforce training and more.

On Housing Assistance: The Center on Budget and Policy Priorities argues that the proposal to block grant the housing voucher program would likely lead to the immediate loss of tens of thousands of vouchers for low-wage families. May 21, 2003 report The National Alliance to End Homelessness argues the proposed changes would substantially reduce the voucher program’s ability to prevent homelessness. ________________ Action Alert on Housing Vouchers ________________

The change is most profound in the case of entitlement programs like Medicaid, food stamps and foster care. As entitlements, these programs receive federal money based on the number of people eligible for assistance. When needs increase, so does federal funding. In the case of housing vouchers, Head Start and job training it means reducing the federal commitment to fund and oversee programs. In either case, recent history shows that a move to block grant funding leads to an erosion of federal support and oversight over time.

Block grant funding is like musical chairs—a risky game. You get a fixed number of chairs, regardless of how many people are in the game.

When federal funding does not automatically increase in hard times, states can do only three things—cut the number of people who are eligible, cut the assistance each person gets or increase state spending to buy more services.

On Medicaid: The Kaiser Commission on Medicaid and the Uninsured says the Bush administration’s proposed cap on federal financing of Medicaid would come hand-in-hand with a dramatic relaxation of federal rules on coverage and benefits. Families USA argues the Administration proposal would result in a loss of almost a half trillion dollars in public health funds over the next 10 years. ________________ Action Alert on Medicaid ________________

During times like these, the last option becomes all the more improbable—states are having as much trouble making ends meet as the families who need help. So instead of adding more dollars, many states are likely to take them away just as more and more people are in the line.

Why does the Bush Administration want to block grant Head Start, Medicaid, housing vouchers, foster care and even food stamps, programs that weave a social safety net for low-wage families and children? In each case, the Administration argues its proposals cut red tape to give states more flexibility. The Heritage Foundation, a conservative think tank, says freeing the federal government of its funding obligations is a key step in shrinking government to make room for more tax cuts—“alleviating federal mandates and reducing federal taxes.”

Why would states be interested? Quick cash, for one. As they face the worst fiscal crises in two generations, many state leaders might be tempted to take the money now and worry about the future later. Funding for the proposed changes in Medicaid, for example, would be front-loaded, giving states more money in the first years, but would reduce funding for health care coverage in the later years.

Head Start: The National Association for the Education of Young Children argues that the Administration’s Head Start proposal puts state flexibility ahead of key elements that make Head Start successful. RESULTS says Head Start children and families could lose the array of services they need if the federal role is shifted to cash-strapped states. ________________ Action Alert on Head Start ________________

Flexibility, for another. A block grant allows states to cut what they spend—to change eligibility thresholds, standards or benefit levels—an attractive offer when state budgets are covered in red ink. For some states, it can provide a way to consolidate programs and services, helping to make them easier for families to use.

But block grants that give states more responsibility and flexibility without more resources are a bad bargain for states, and an even worse bargain for low-wage parents and their children. Families struggling to make ends meet on a bare-bones budget still need to pay the grocery store, the landlord and the pharmacy. They don’t get a discount just because federal lawmakers decide “we will give this much, and no more.”

Once block grants free the federal government from its obligations to administer, set standards, and fund social programs, there’s one thing you can count on—fewer chairs and more families cut out of the game. But this is no game.

Talk Back

If you've got comments or questions about this story, we'd like to hear them. Send your response to Jan Richter.